It makes sense, whether you are buying or selling a home, to find an agent who will fight for your best interest. A listing agent has a fiduciary duty to look out for the seller’s best interest which usually means getting the highest price possible for the home. A buyer’s agent has a fiduciary duty to look out for the buyer’s best interest and get the buyer the best deal possible.

When the buyer and seller are both represented by the same agent, dual agency is created and so is a conflict of interest. The agent can no longer fight for the best interests of either buyer or seller. The agent has an incentive to make the transaction happen and collect both sides of the commission. As a buyer or seller, you are entitled to decline dual agency. If one agent will represent both the buyer and seller in a transaction, both buyers and sellers must be fully informed and agree to this conflict of interest created in dual agency. This disclosure must be in writing.

What many do not realize is that when a broker represents both the buyer and seller in a transaction, dual agency is created. Only the head broker of an agency has authority to buy or sell. Ever notice that the commission checks at a closing are not written to your agent, but to the broker that the agent is under? There is only one head broker in an agency. In a large agency, several agents may work under one broker. For example, Realtor Rita and Realtor Rick, both work under Broker Bob. Realtor Rick cannot show his buyers any homes listed by Realtor Rita unless Rick’s buyers and Rita’s sellers understand the conflict of interest created and after full written disclosure, agree to dual agency. Although buyer and seller often have conflicting interests, under dual agency, agents are prohibited from advocating exclusively for either party.

Some in Minnesota would like to call dual agency under a broker, “designated agency.” Proponents of designated agency argue that agents can work in the client’s best interests over what is in the best interest of the firm, the broker, their boss. Over half the states agree. Others argue that when the brokerage is receiving both commissions, a conflict of interest should be disclosed to the clients. If you want your opinion to be heard, contact your representative.

Glen, the head broker of Castle Homes MN, is committed to working for you. Looking to sell? Glen can give you a free market analysis and tell you how he would market your home. Looking to buy? Glen listens to you and is eager to help you find your castle, large or small. Castle homes’ transactions range from a $20,000 investment property to a nearly million-dollar home. You deserve an agent that will work for you! Glen 763-670-8679 or glen@castlehomesmn.com

Buying a home is exciting and knowing the jargon will make it less intimidating. The phrase "Highest and Best" is one buyers have been seeing in our area quite often lately. What does it mean? Paula Pant has put together a list buyers may find helpful.

Amortization - Refers to the repayment schedule on a mortgage. At the beginning of a loan term, most payments are applied towards the interest due, rather than the principal. Towards the end of the loan term, the situation flips: the interest has been paid in advance, so most payments apply towards principal paydown.

APR – Stands for “annual percentage rate,” and is the most accurate indicator of the cost of a mortgage loan. The APR reflects all of the closing costs, which can total as much as 3 to 5 percent of the loan. The best way to price-compare between various mortgages is by looking at the APR rather than the interest rate. The APR can be found on your loan disclosure documents.

Appraisal - Refers to a qualified appraiser providing a written estimate of a property’s value. This is considered the most definitive expression of a property’s value (short of an actual arms-length transaction) and is often required by lenders.

Assessment - Refers to the city or county’s opinion of the property’s value. Important note: Assessments impact your property tax rate. Appraisals do not.

ARM – Stands for “adjustable-rate mortgage,” a type of mortgage in which the interest rate fluctuates based on the prevailing rates in the overall economy. Many ARMs will lock a fixed interest rate for a limited period of time, such as 5 years, 7 years or 10 years. Many will also guarantee that a rate increase will be “capped” at a certain maximum, such as 2 percent.

Balloon Payment – Refers to the practice of paying off the entire mortgage balance in full. Some loans (particularly those given to investors) are short-term mortgages that require a “balloon payment” at the end.

BPO - Stands for “Broker Price Opinion.” Refers to a licensed real estate broker providing a written opinion as to the fair-market value of a property. This is different than an appraisal.

Cash-Out Refinance – This refers to the practice of taking out a loan over a fixed term (as long as 30 years), borrowed against the equity in a home. For example: a homeowner who possesses a lot of equity can take a “cash-out refi” for tens of thousands, which he then uses to launch a business, buy a rental property, or any other goal.

Capital Gain - When an owner sells their home, the increased value of their home is a capital gain. Fortunately, owner-occupants who reside in their primary residence for two years or more do not need to pay capital gain tax on the sale of their property.

Closing Costs – A blanket term for all of the ancillary costs associated with borrowing a mortgage and buying a home. This includes title insurance, a loan origination fee, title search fees, recording fees, underwriting fees, and more.

Contingency - When a buyer submits an offer to purchase a property, they commonly make the offer “contingent upon” some condition, such as financing or a favorable home inspection. This means the offer “hinges upon” that condition playing out favorably, and can be withdrawn if the condition isn’t met.

Depreciation – Many people believe that their home value rises. In fact, the value of the underlying land may rise, but the actual structure depreciates each year. The roof, carpet, paint, HVAC and other components of the home experience aging and decay. (In markets with rapid appreciation, though, the retail value of the structure might outpace depreciation.) Depreciation is reported on IRS Form 4562.

Fixed-Rate – Unlike an ARM, a fixed-rate mortgage (sometimes just called “fixed”) retains the same interest rate over the duration of the loan, regardless of what’s happening in the overall economy. A 30-year fixed loan, for example, will retain the same interest rate for the full 30-year span.

FHA - Refers to the U.S. Federal Housing Administration. Many first-time homebuyers opt for loans that are insured by the FHA. Known as “FHA loans,” these require a smaller downpayment (as low as 3.5 percent).

GC - “General Contractor,” a licensed designation that indicates someone who organizes a major renovation and coordinates all the specialty sub-contractors such as the electricians, drywall installers and plumbers.

Highest and Best - Also known as “Best and Final,” this represents the best (seriously, the best) offer that you can make the seller. If the seller receives multiple offers, she might call for all the bidders to submit their “highest and best” (or “best and final”) offer by a particular deadline, so that she can select among these final offers.

Inspection - Prior to purchasing a house, a professional inspector (certified by ASHI, the American Society of Home Inspectors, or an equivalent organization) should spend 3-4 hours throughly investigating the home. The inspector focuses on structural flaws, mechanicals like plumbing and HVAC, and other aspects of the home. The inspector can furnish a written report, but cannot quote a price for repairs (he’s not a contractor.)

LTV – “Loan-to-value.” This refers to the ratio of the loan amount, relative to the overall value of a property. For example: a $70,000 loan on a $100,000 property will have a 70 percent LTV ratio.

RE – This is an easy term: “RE” simply stands for “real estate.” Many professionals use this shorthand.

REALTOR – Fun fact: Not all real estate agents are REALTORS. A real estate agent is an individual who is licensed to buy and sell real estate. A REALTOR is an agent or broker who belongs to the National Association of REALTORS.

It is very common for a house that is already priced low to sell for above the asking price. Keep that in mind if you see a house you really want.

If a house has been on the market a long time and is overpriced, you can offer low and often get it. If a house is new on the market and fairly priced and you offer low, your offer will most likely not be accepted.

Paying more than asking can often be a better deal than getting an overpriced house for less than asking. I know that is common sense, but it is hard to remember when looking at houses. We all want a great deal, and we have been conditioned to think we should not have to pay asking price for anything.

We wait for a sale to buy our cars, sheets, and clothes. We stock up on staples when they go on sale. With houses, pricing is more complex.

If a bank is selling a foreclosed house, they look at the bottom line. If you are asking them to pay closing costs, you may wish to offer a higher price to compensate. If the house is being sold by a traditional seller, including a letter of what you like about their home and how you envision your family in their home may help you get a lower offer accepted. This is especially true if the seller is sentimental about leaving the home they filled with memories or if they already moved and may be making two house payments.

Bottom line: make the offer one where you will feel good if you get the house and you will feel good if you don't.

Real-estate investing amid new mortgage rulesWhat you need to know before you buy property as an investment

By George Schofield, Credit.com

With interest rates still hovering near all-time lows, and property values in many places improving but still far below 2007 highs, investing in real estatemay seem like a smart move — especially for anyone squeamish about investing in the stock market. (A whopping 76% of consumers are saying no to equities, according to Bankrate’s latest Financial Security Index.)

But new mortgage lending rules , which went into effect Jan. 1, will have a direct impact on many of these investors’ plans. Credit requirements have tightened, in some cases dramatically, and lenders are now also looking at the number of leveraged properties an investor owns — not just the equity of those homes — before lending any more cash for any purpose.

Here’s what you need to know if you’re going to borrow to invest in real estate:

•The new mortgage rules were drawn up by the Consumer Financial Protection Bureau, created following the enactment of the Dodd-Frank Act in 2010. Some new regulations are designed to protect homeowners from lender and mortgage-service abuses. But others are designed to ensure that borrowers won’t have trouble making their mortgage payments by taking on more debt than they can handle.

•The new rules don’t affect the vast majority of people seeking a new mortgage or who want to refinance an existing one. According to the CFPB, only 12.8% of mortgages originated in 2012 don’t meet the new standard.

•The new rules strictly define a “qualified” mortgage up to 30 years. A borrower’s maximum debt-to-income ratio must be 43% or lower. No negative amortization or interest-only payments.

•If you want to invest in real estate, either to improve and quickly resell (flip) or to generate rental income, know that Federal Housing Administration loans, which require modest down payments, now have lower maximums than before. The top loan amounts vary from state to state, and even within states; in some places, like Florida, the top FHA loan amount plummeted from $417,000 to $285,000 for a jumbo mortgage. So if you have your sights set on a high-end flip or a multi-unit rental property, be prepared to pony up a lot more cash up front.

•Even for more modestly priced structures, for the best rates, down payments on investment properties are typically higher than for a primary residence. Be prepared to pay 25% down vs. 20% for a standard mortgage.

•If you own several properties and want to use the equity in them to buy another property or refinance an existing one, you may be turned down — even if you have stellar credit scores, substantial net worth and a low debt-to-income ratio. Lenders are setting arbitrary thresholds for the number of mortgages a person can hold. In some cases, that number is four.

•You may find your home equity line of credit canceled at the lender’s discretion. Read the fine print.

What makes it a buyers market? Lots of homes to choose from, good, fair prices, and low interest rates are some factors that make it a good time to buy. Though there are many homes on the market, many listings are getting multiple offers and going quickly. If you see a house you know is fairly priced and you make a low offer, there is a risk you will lose the house. I always tell buyers something someone told me, "Offer the amount you will feel good if you get it and good if you don't."

Because homes are going quickly, you will want to be ready to make an offer. Before you look at homes:

Have a pre-approval letter from a lender in the amount you qualify for, and/or a bank statement verifying funds. These will need to be submitted with an offer.

Have a minimum of $1,000 in your checking account so you can write a check for the earnest money. This also needs to be submitted with an offer.

Tell your agent the features you have to have (at least 3 bedrooms, at least 2 acres, etc.) and the features you would like to have (swimming pool might be nice).

Ask your agent to send you listings via email. This will help you eliminate the houses that don't fit your criteria, so when you physically go look it will be at houses you like.

I can put you in touch with a loan officer who will get you a free pre-approval letter, and I would be happy to let you know what your home is worth or show you new homes.

Call Karen Grossman at 763-670-8670 or email me at KarenVGrossman@gmail.com

Here's a look at 12 U.S. metropolitan areas (with populations of more than 500,000) that enjoyed the largest percentage increases in home prices in the year ending September 30, 2012.

The markets in most of these cities featured in this slide show peaked and busted in 2006 and are now well into their recovery. Most of these cities have rates of unemployment at or below the national average, which is indicative of healthy economies that fuel buyer confidence and demand. Supply in most of these cities is low and favors sellers.Read the rest and see the slide show here.

Back in February Warren Buffet advised buying homes as an investment: "If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down." Rates are lowest they have been in years. I have been helping people get into homes that cost less than rent. If you are looking to get out of the rent trap, looking to invest or in the market to change homes, I'd love to show you some of the great deals out there now.